FW: FI Morning Grain Comments 02/07/20

PDF attached

 

Morning. Quiet on the news front.

 

 

Does not appear USDA will incorporate Phase One trade deal into their Feb S&D report. 

https://www.usda.gov/oce/commodity/reports/USDATradeForecastsAndUSChinaAgreement.pdf

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
continues supportive of crops in most of Brazil and Argentina. There is some concern over rainfall in Brazil delaying some of this year’s soybean harvest, but the bottom line should not impact production for most areas. A few areas in Argentina may become
too wet in the next few days after some heavy rain already occurred overnight.

            Australia’s
summer crops will get some additional rainfall in this coming week and India crops will remain in good shape. China still has potential for improving rapeseed production potential once spring arrives due to recent precipitation and improving soil moisture
in parts of southeastern Europe into Kazakhstan may do to the same for those areas in the spring.

            Southeast
Asia weather will trend a little wetter in the coming week restoring favorable soil moisture to many Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today is likely to contribute a bearish bias on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Weather
continues supportive of crops in most of Brazil and Argentina. There is some concern over rainfall in Brazil delaying some of this year’s soybean harvest, but the bottom line should not impact production for most areas. A few areas in Argentina may become
too wet in the next few days after some heavy rain already occurred overnight.

            Australia’s
summer crops will get some additional rainfall in this coming week and India crops will remain in good shape. China still has potential for improving rapeseed production potential once spring arrives due to recent precipitation and improving soil moisture
in parts of southeastern Europe into Kazakhstan may do to the same for those areas in the spring.

            Southeast
Asia weather will trend a little wetter in the coming week restoring favorable soil moisture to many Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today is likely to contribute a bearish bias on market mentality.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

FRIDAY,
FEB. 7:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Agricultural
  conference organized by consultancy IKAR, Moscow
• Guatemala
  Coffee Exports

SUNDAY,
FEB. 9:

• Dubai
  Sugar Conference, Feb 9-12; speakers include Al Khaleej Sugar

MONDAY,
FEB. 10:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• National
  Ethanol Conference, Feb. 10-12
  • Speakers
    include former U.S. President George W. Bush and USDA Undersecretary Ted McKinney
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  Feb. 1-10 palm oil exports data
• Ivory
  Coast cocoa arrivals

TUESDAY,
FEB. 11:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• France
  agriculture ministry gives estimate for 2020 winter grain and rapeseed plantings
• China
  agriculture ministry’s (CASDE) supply, demand monthly report
• Brazil
  Conab soybean and corn yield, area and production
• Sao
  Martinho Earnings Conference Call, Sao Paulo
• HOLIDAY:
  Japan

WEDNESDAY,
FEB. 12:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
FEB. 13:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Giant
  pulp maker Suzano holds investor day in Sao Paulo
• Brazil’s
  grain exporter group Anec holds conference on 2019-20 crop outlook

FRIDAY,
FEB. 14:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  crop conditions – French crops office expected to resume crop-conditions reports after winter break
• New
  Zealand food prices
• Biosev
  holds analyst conference call to discuss 4Q earnings.

Source:
Bloomberg and FI

 

 

 

 

 

CBOT
registrations

·        
No changes

 

 

 

 

Macros

·        
US Non Farm Payrolls Jan: 225K (est 165K ; prevR 147K ; prev 145K)

·        
US Unemployment Rate Jan: 3.6% (est 3.5% ; prev 3.5%)

·        
US Average Earnings (M/M) Jan: 0.2% (est 0.3% ; prev 0.1%)

·        
US Average Earnings (Y/Y) Jan: 3.1% (est 3.0% ; prevR 3.0% ; prev

·        
Canadian Unemployment Rate Jan: 5.5% (est 5.7% ; prev 5.6%)

·        
Canadian Full Time Unemployment Change SA Jan: 35.7K (prevR 33.9K ; prev 38.4K)

o  
Canadian Part Time Employment Change SA Jan: -1.2K (prevR -6.5K ; prev -3.2K)

 

 

Corn.

·        
Corn futures are
higher but look for prices to remain rangebound on lack of bullish news.  US jobs report (227k vs 165k est.) was a bullish indicator for the US economy. 

·        
Hong Kong has 25 cases of coronavirus.  630 deaths have been reported in China.

·        
China’s Hubei province plans to boost food supplies by releasing 2,000 tons of frozen pork from reserves.  COFCO will send 200 tons of rice, 50 tons of flour and noodles, and 300 tons of edible oils to Wuhan
– each day. 

·        
Open Interest in corn was up 6,810 contracts.

·        
Goldman Roll starts today. 

• BA
  Grains Exchange reported at least 96% (latest report) of Argentina’s 2019-20 soybean crop was getting enough water.  They have production at 53.1 million tons, below the 55.1 million tons in 2018-19. 
  

·        
A large number of containers are apparently stuck over in China. 

 

Export
Developments

• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.

 

Soybean
complex.

·        
CBOT soybeans are moderately higher at the electronic pause.  Higher USD and weaker Brazilian real should limit gains.  Meal is higher. If it closes higher, then a bottom established yesterday might be in,
at least for the short term.  Soybean oil is on the defensive on lower palm and CBOT product spreading.  China crush margins significantly improved this week and end users and state-run buyers booked more than one million tons of South American soybeans. This
disappointed US bull traders awaiting material results from the Phase One trade deal.  

·        
Goldman roll starts today, lasting five days. 

·        
Open Interest in soybeans was up 7,822 contracts. 

·        
The US$ is higher and the lower. The Brazilian Real was lower-last 4.2900.

• Brazil’s
  wet weather is starting to affect early soybean exports. We are hearing vessels at the ports in Santos and Paranagua are starting to pile up.  Heavy rain is expected to fall across many of the growing regions through mid-February. 
  

·        
Offshore values are leading CBOT soybean oil 27 points lower (11 higher for the week to date) and meal flat ($2.00 higher for the week). 

·        
Rotterdam vegetable oils this morning were up slightly for nearby soybean oil positions and 5-6 euros lower for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 2 euros higher. 

·        
China:

·        
China cash crush margins as of today, using our calculation, was 139 cents per bushel (137 previous), compared to 84 cents more than a week ago and 48 cents around this time last year. 

·        
Malaysian palm oil snapped a 4-day winning streak. 

·        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

• We
  are hearing China may have bought upward to 20 cargos of soybeans from SA this week for March-June shipment.
  

 

Wheat

·        
US wheat futures are higher but look for gains to be limited on lack of bullish news, improving soil moisture over the past week for the US Great Plains, and higher USD.

·        
Algeria granted preliminary approval for importing Russian wheat.

·        
IKAR warned Russia wheat exports could fall below 32 million tons. Russia shipped 22.1 million tons of wheat between July 1 and Jan. 30.

·        
IKAR estimated the Russia grain crop at 127MMT, with exports reaching 48 million tons. 

·        
China and Hong Kong citizens are apparently shifting short term diets over to noodles and rice, one reason we may have seen China demand for wheat pick up over recent weeks. 

·        
China southwestern province of Sichuan is battling fall armyworms, according to news agency Xinhua. 

·        
Goldman Roll starts today. 

·        
Some strikes are still ongoing (on and off) in France.

·        
March Paris wheat futures were up 0.50 at 193.50 euros as of early this morning.

·        
French wheat is cheapest in the world.

·        
France exported 1.2 million tons of soft wheat outside the European Union in December, up from 1.0 million tons in November and highest monthly volume since the start of the marketing year. 

·        
Eastern Australia is going to see rain through mid-February which will benefit the sorghum crops. 

 

 

Source:
World Weather Inc. and FI

 

Export
Developments.

• South
  Korea bought US wheat this week.  Total volume was thought to be around 71,200 tons. 
  
• Jordan
  seeks 120,000 tons of optional origin wheat on Feb. 11. 

• Jordan
  seeks 120,000 tons of optional origin animal feed barley on Feb. 12, at various shipment periods thought to be May 1-15, May 16-31, June 1-15 and June 16-30.
• Japan
  in an SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 30, on Feb. 12. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  
• The
  Philippines might be in for wheat soon.

 

Rice/Other

·        
Mauritius has delayed the deadline for to buy up to 6,000 tons of long grain white rice to Feb. 10, for delivery between May 1 and July 31.

·        
Turkey’s TMO seeks 20,000 tons of rice on Feb. 12 for shipment between Feb. 19 and April 6.